Saudi Arabia’s Shoura Council has approved a plan to tax landowners on vacant properties following an earlier Saudi Cabinet decision to pursue a tax on so-called ‘white properties.’
The plan was approved by Saudi Arabia’s King Salman in March and the issue was sent to the Shoura council to be voted upon. It still awaits final approval. As SUSTG reported in March, some estimate that the total effect of the tax could nearly halve the price of housing for most Saudis, but it is a politically sensitive decision, “because it may hurt the interests of influential people” in Saudi Arabia – the landowners that inherited swaths of land from previous generations or even from Saudi royalty.
Deputy Crown Prince Mohammed bin Salman, who chairs the Council on Economic and Development affairs.
The tax on undeveloped land would nudge property owners to build on or sell the land, which is connected to roads and utilities and is otherwise suitable for development. As Bloomberg notes, Saudi Arabia needs affordable housing and will struggle to meet demand without constructing millions of new homes to match it. Bloomberg quoted the Shoura Council’s twitter feed that the goal of the law is “to work toward achieving balance between supply and demand to address the housing crisis…The state does not aim to collect funds or support its financial resources through imposing fees.”
The regulations were prepared by the Council of Economic and Development Affairs, chaired by Deputy Crown Prince Mohammed bin Salman. In March, the regulations were reported to be “urgently” prepared.
In March, WSJ reporter Ahmed al-Omran quoted Essam al-Zamel, a local business commentator, as saying the decision to impose taxes on unused land “would have major consequences on the local economy….We are talking about trillions of riyals frozen for years that have been hampering development in both the public and private sector…”
